Measuring the Contribution of Knowledge

Abstract

This thesis attempts to contribute to the growing literature on knowledge (or intangible) capital, considering innovation in the context of its contribution to growth and using an extension to the national accounting framework first outlined in Nakamura (1999) and Corrado, Hulten and Sichel (2005). Chapter 1 presents the underlying framework, set out in the context of previous literature and used to confront measurement issues encountered when knowledge capital is incorporated into a national accounts setting. The second chapter confronts measurement of knowledge investment, in the context of UK ‘artistic originals’. The chapter evaluates official estimates and presents new estimates using a variety of methods and new data. The third chapter confronts estimation of the price of knowledge acquisition, with an application to own-account software. In 2009 the UK market sector invested £13.5bn in own-account software, more than ICT hardware (£12.3bn), making estimation of its price a first order issue for productivity analysts. The chapter describes official methodologies and presents new estimates that explicitly consider technical progress in production. The fourth chapter brings together more elements of the broader work programme, presenting data on investment in, and contributions to growth from, the full range of intangibles discussed in Chapter 1. These data are used to estimate the contribution of innovation to UK growth at both the industry and aggregate level. The fifth chapter considers the potential for knowledge capital to generate social returns in excess of the private returns measured in Chapter 4. It uses the dataset developed in that chapter and searches for evidence of spillovers from R&D and other intangibles. The final chapter uses new estimates of telecommunications equipment prices to re-estimate the contribution of telecommunications capital both directly, via growth accounting, and indirectly, using econometrics to search for evidence of network effects. Appendices include papers on related work.